| COURT: | Supreme Court |
| CORAM: | Prafulla C. Pant J, Ranjan Gogoi J |
| SECTION(S): | 263 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Revision |
| COUNSEL: | Shyam Diwan |
| DATE: | May 11, 2016 (Date of pronouncement) |
| DATE: | May 16, 2016 (Date of publication) |
| AY: | 2001-02 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 263: Even if AO applies mind and decides not to assess expenditure as unexplained u/s 69C because the assessee withdrew the claim for deduction, the CIT is entitled to revise the assessment on the ground that the matter needed further investigation | |
(i) The CIT took the view that notwithstanding the withdrawal of the claim by the assessee, in view of the earlier stand taken that the said expenses were incurred for security purposes of the assessee, the Assessing Officer ought to have proceeded with the matter as the assessee was following the cash system of accounting and the filing of the re-revised return, prima facie, indicated that the additional expenses claimed had been incurred. Withdrawal of claim by assessee can be for variety of reasons and this does not mean that Assessing Officer should abandon enquiries regarding sources for incurring expenses. Assessee follows cash system of accounting and the claim regarding additional expenses was made through duly verified revised return. The claim was pressed during assessment proceedings carried on by A.O. after filing revised return and it was specially stated in letter dated 13.02.2004 that expenses were for security purposes and that payments have been made out of cash balances available etc. Under the circumstances, the Assessing Officer was expected to examine the matter further to arrive at a definite finding whether assessee incurred expenses or not and in case, actually incurred, then what were sources for incurring these expenses. Assessing Officer was satisfied on withdrawal of the claim and in my view, his failure to decide the matter regarding actual incurring of additional expenses and sources thereof resulted into erroneous order which is prejudicial to the interest of revenue.”
(ii) There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from. However, the above is not the situation in the present case in view of the reasons stated by the learned C.I.T. on the basis of which the said authority felt that the matter needed further investigation, a view with which we wholly agree. Making a claim which would prima facie disclose that the expenses in respect of which deduction has been claimed has been incurred and thereafter abandoning/withdrawing the same gives rise to the necessity of further enquiry in the interest of the Revenue. The notice issued under Section 69-C of the Act could not have been simply dropped on the ground that the claim has been withdrawn. We, therefore, are of the opinion that the learned C.I.T. was perfectly justified in coming to his conclusions insofar as the issue No.(iii) is concerned and in passing the impugned order on that basis. The learned Tribunal as well as the High Court, therefore, ought not to have interfered with the said conclusion.
While I agree with the view of the hon court; i have to state; there is a possibility of corruption that could have motivated by the CIT too earn his pie too; as AO has accepted the withdrawal of the tax payer as condition precedent for his order not to proceed further in the matter; in such type of sec 69 cases; the tax payer is to be allowed to file his complete cash payments for his reasons; as also the security persons if they got cash payments it has to be seen whether those beneficiaries filed their returns; if they said they received cash for the amounts shown in tax payers’ statement of returns to the IT authorities, the question of paying in cash can never be taken as a crime on the part of the tax payer if the beneficiary insisted upon to be paid by cash the liability need to be shifted on the beneficiaries; but fact remains in the industry a lot of cash transaction when in place and accounted for the cash payments can never be treated as a crime ; as the governments in place had already permitted cash transactions; as politicians too indulge in such deals; when so the chances of simply blaming the tax payer is against the principle of Art 14 r/w art.265, is my view as any other IT sections cannot countermand the constitutional articles; as IT laws are subservient to the constitution though permit under Art 377 some of the Acts prevailing under Government of India Act 1935, is my considered view; so benefit of doubt is to be given to the tax payer, that way the tax payer is a citizen a dejure person National which every government is elected by voters only as india is a vibrant democracy.
Now i see, a lot of persons are getting tax Notices you have not complied this or that obviously to encourage the revenue to get illegal gratification by through the conduits’ functions in a lot of tax professionals is sulking; how we will locate them if we do not have straight forward simplified laws, as every finance Act introduces so many random sections by permitting too many subordinate legislation mostly half baked in their conception, so my second considered view is that the honorable court have to inquire into to find out what is the real fact behind so many new regulations; usually putting the tax payers into too many grills while – whether the tax payer himself become a great tax professional while forgetting his normal work he is to carry on;
No doubt professionals get jobs from the tax payers, but the sincerity of the professions are already in deep clouds more so in the direct taxes issues.
this is not casting aspersions; but is there are a lot of black sheep in the professions too, that need be countenanced is my view.
regards.
I agree with you Sir. One area where immediate action is required is regarding responsibility on buyers where property bought exceeds Rs 50 lakhs and buyers have to deposit Form 26 QB with TDS @ 1%. considering Market value of properties today the threshold limit of Rs 50 lakhs is very low and should be raised or the responsibility for TDS in such cases should be entrusted to the Sub Registrar concerned who registers the sale deed.